CONTENTS

2 About Us 3 The Grainger Edge4 Geographic Overview5 Business Model 6 Portfolio and Strategic Pillars7 U.S. Business – High-Touch Solutions Model8 U.S. Business – Advantaged MRO Solutions 8 U.S. Business – Unparalleled Customer Service9 U.S. Business – Differentiated Sales and Services 10 Canada – High-Touch Solutions Model10 Mexico – High-Touch Solutions Model10 International – High-Touch Solutions Model11 Endless Assortment Model 12 Creating Shareholder Value 13 Historical Financial Summary14 Financial Definitions and Non-GAAP Reconciliation/Company Information

Fact Book 2020

17% Safety and Security 11% Material Handling10% Metalworking 8% Cleaning and Maintenance 8% Pumps, Plumbing and Test Equipment 6% Hand Tools 5% HVAC

17% Heavy Manufacturing 14% Government 10% Light Manufacturing 8% Commercial 8% Contractor 7% Retail/Wholesale 6% Healthcare 5% Transportation 4% Natural Resources 21% Other*

4% Electrical 4% Power Tools 3% Fluid Power 3% Lighting 3% Specialty Brands 2% Power Transmission 1% Motors 15% Other*

* A portion of Other includes revenue from businesses outside of the U.S. and Canada.

2019 SALES CUSTOMER CATEGORY 2019 SALES PRODUCT CATEGORY

More than

3.5 millionactive customers

1.6 million products stocked

5,000 key product suppliers

More than

25,000team members

Approximately

W.W. GRAINGER, INC. AND SUBSIDIARIES 2

Safe Harbor StatementAll statements in this Fact Book, other than those relating to historical facts, are “forward-looking statements.” Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expect,” “could,” “forecast,” “may,” “intend,” “plan,” “predict,” “project” “will” or “would” and similar terms and phrases, including references to assumptions.

Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such statements. Forward-looking statements include, but are not limited to, statements about future strategic plans and future financial and operating results.

Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among others: the unknown duration and economic, operational and financial impacts of the global outbreak of the Coronavirus (COVID-19 pandemic) and the actions taken or contemplated by governmental authorities or others in connection with the pandemic on the company’s businesses, its employees, customers and suppliers, including the uncertain duration of mandated shut-downs for our customers and suppliers, changes in our customers’ product needs, our suppliers’ inability to meet unprecedented demand for COVID-19 related products, the potential for government action to allocate or direct products to certain customers which may cause disruption in our relationships with other customers, and disruption caused by business responses to COVID-19, including working remote arrangements, which may create increased vulnerability to cybersecurity incidents; higher product costs or other expenses; a major loss of customers; loss or disruption of sources of supply; increased competitive pricing pressures; failure to develop or implement new technology initiatives or business strategies; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in the company’s gross profit percentage; the company’s responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, advertising, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, safety or compliance, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards; government contract matters; disruption of information technology or data security systems involving us or third parties on which we depend; general industry, economic, market or political conditions; general global economic conditions including tariffs and trade issues and policies; currency exchange rate fluctuations; market volatility, including volatility or price declines of the company’s common stock; commodity price volatility; labor shortages; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; pandemic diseases or viral contagions; natural and other catastrophes; unanticipated and/or extreme weather conditions; loss of key members of management; our ability to operate, integrate and leverage acquired businesses; changes in effective tax rates; changes in credit ratings or outlook; the company’s incurrence of indebtedness and other factors which can be found in our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available on our Investor Relations website. Forward-looking statements are given only as of the date of this communication and we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

For a list of factors that could cause Grainger’s results to differ materially from those that are presented, please see Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, other factors identified under Item 1A: Risk Factors and elsewhere in Grainger’s Annual Report on Form 10-K.

W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) supplies and other related products and services. More than 3.5 million businesses and institutions worldwide rely on Grainger for products in categories such as safety, material handling and metalworking, along with services like inventory management and technical support. These customers represent a broad collection of industries, including commercial, government, healthcare and manufacturing. They place orders online, on mobile devices, through sales representatives, over the phone and at local branches. Approximately 5,000 suppliers provide Grainger with 1.6 million products stocked in the company’s distribution centers (DCs) and branches worldwide. Grainger employs 25,000 team members across the globe. For more information on Grainger, visit www.grainger.com/investor.

About Us

W.W. GRAINGER, INC. AND SUBSIDIARIES 3

Last year, Grainger introduced the Grainger EdgeSM framework that uniquely defines the company by describing why it exists, how it serves its customers and how its team members work together to achieve its objectives.

Grainger’s purpose is to keep the world working. Whether that means helping a hospital focus on patient care, a manufacturing plant focus on building great products or a school focus on teaching, Grainger and its team members helps keep facilities running so customers can focus on what they do best.

The framework also outlines a set of principles that define the behaviors expected from Grainger’s team members in working with each other and their customers, supplier partners and communities. It is a basis for holding team members accountable to these principles and that they will help the company execute its strategy and create value for shareholders.

OUR PURPOSE

OUR STRATEGY

OUR ASPIRATION

OUR PRINCIPLES

High-Touch Solutions Model• Advantaged MRO solutions• Differentiated sales and services• Unparalleled customer service

Endless Assortment Model• Expansive product assortment• Innovative customer acquisition and retention capabilities

Do therightthing

Startwith the

customer

Embracecuriosity

Act withintent

Competewith

urgency

Win asone team

Investin our

success

We relentlessly expand our leadership position by being the go-to partner for people who build and run safe, sustainable and productive operations.

We Keep the World WorkingSM

The Grainger EdgeSM

W.W. GRAINGER, INC. AND SUBSIDIARIES 4

APPROXIMATEMARKET SHARE

DISTRIBUTION CENTERS (DCS) 1

BRANCHES 1APPROXIMATE NUMBER OF CUSTOMERS SERVED

(THOUSANDS) 2

UNITED STATES 7 percent 17 282 1,000

CANADA 4 percent 5 53 50

OTHER BUSINESSES

ENDLESS ASSORTMENT BUSINESSES 2 percent 4 — 2,600

INTERNATIONAL HIGH-TOUCH SOLUTIONS BUSINESSES 1 percent 6 119 150

TOTAL 4 percent 32 454 3,800

1 See 2019 Form 10-K Item 2, “Properties” for more information.2 Customers served in the U.S. may include overlap with Zoro within the endless assortment businesses.

In the large and fragmented MRO industry, Grainger holds an advantaged position with its supply chain infrastructure, broad in-stock product offering, robust eCommerce platform and deep customer relationships.

The global MRO market is approximately $622 billion, and Grainger’s estimated addressable market is approximately $290 billion. Grainger is most successful in markets where it has scale positions in purchasing, supply chain and IT, and where a developed infrastructure exists. Those markets include North America, Europe and Japan. Each of these core markets has strong growth characteristics: the market is large, and the competition is highly fragmented. In total, Grainger has about a 4 percent share of its addressable market with ample opportunity for growth.

The table below shows Grainger’s estimated share of the MRO market and the summary of its operations by reporting segments and other businesses as of December 31, 2019:

Geographic Overview

Sales and Service Representatives Digital

Website KeepStock® EDI/ePro

Phone Branch

Sales and service representatives and digital solutionsdrive relationships with purchasers and end users

Primarily Digital

Digital solutions and marketingto build relationships

Website

Highly curated productinformation and search

Embedded in large customer purchasing process

Strong technical knowledge across a wide range of product lines helps customers through the purchasing process over the phone or at the branch

Expansive assortment across allbusiness-to-business categories

at competitive prices

Stocked assortment of quality industrialMRO products with high availability

ENDLESS ASSORTMENT

Distribution Center

Broad assortment at competitive prices

KeepStock®

Inventory management system

HIGH-TOUCH SOLUTIONS1

Customized services and curated product offering for complex customer needsMODEL/VALUE PROPOSITION

RELATIONSHIPS

ORDERORIGINATION

ORDER FULFILLMENT Branch

Distribution Center

Streamlined search andtransactional experience

Digital Channels

Direct-to-Customer (DTC)

19% of orders

10% of orders

30% of orders

16% of orders

25% of orders

70% of orders shipped direct-

to-customer (DTC)

17% of orders delivered through

KeepStock

13% of orders picked upat branch

1 High-touch solutions order origination and ful�llment data is for the U.S. Business and excludes Zoro U.S.

®

®

®

®

®

®

®

®

®

The company’s strategy has always been defined by its customers’ needs, and Grainger uses a combination of its high-touch solutions and endless assortment models to serve customers of all sizes.

The high-touch solutions model serves customers with complex buying needs, primarily in North America. This model helps Grainger create powerful customer solutions, deliver a great customer experience and develop deep customer relationships—whether onsite, at a branch, over the phone or online. Grainger creates value for customers through its sales and service representatives, technical product support, fulfillment capabilities, inventory management solutions and other services.

The endless assortment model is designed for customers with less complex needs and includes the Zoro brand in the United States and Europe and MonotaRO in Japan. Customers buying through the endless assortment platforms can quickly find the products they need with an easy and streamlined online search experience and an expansive product assortment. The assortment contains millions of SKUs, including products outside of traditional industrial MRO categories.

W.W. GRAINGER, INC. AND SUBSIDIARIES 5

Business Model

W.W. GRAINGER, INC. AND SUBSIDIARIES 6

Each business in Grainger’s portfolio has a set of strategic pillars focused on creating value for customers.

Portfolio and Strategic Pillars

High-Touch Solutions ModelGrainger is focused on growing share through the Grainger brand in North America with large and midsize customers by focusing on the following strategic pillars:

Endless Assortment ModelGrainger is investing in the growth of its endless assortment businesses (MonotaRO and Zoro) through product assortment expansion and enhanced marketing and analytics capabilities that drive customer acquisition and retention. Read more on page 11.

Across the BusinessGrainger continues to focus on driving growth while maintaining a prudent cost structure. Overall, Grainger operates under the strategy of continuous improvement and methodical investments. 2019 was a year of investment in both the growth initiatives in the U.S. high-touch model and the infrastructure for growth in the endless assortment businesses—while still driving SG&A leverage for the year.

BUILDING ADVANTAGED MRO SOLUTIONS Providing advantaged MRO solutions means being able to get customers the exact products and services they need to solve a problem quickly. Grainger delivers value to its customers through a broad assortment of high-quality products, customer and product expertise and digital capabilities. Read more on page 8.

DELIVERING UNPARALLELED CUSTOMER SERVICE Grainger is committed to providing the absolute best customer experience in the industry through its efforts to deliver flawlessly on every customer transaction. Read more on page 8.

OFFERING DIFFERENTIATED SALES AND SERVICESGrainger has an advantage in serving complex customers at their places of business through its direct customer relationships and onsite services. Read more on page 9.

HIGH-TOUCH SOLUTIONS ENDLESS ASSORTMENT

TOTAL COMPANY4

U.S. Canada International2

REVENUE $ 8.8B $ 0.5B $ 0.8B $1.8B $11.5B

DAILY REVENUE GROWTH % 3% (19%) (9%) 19% 2%

OPERATING MARGIN %1 16% 1% (17%) 7% 11%

ROIC1 42% 1% (19%) 32%3 27%

1 For a reconciliation of non-GAAP measures reflected on this page and ROIC definition, see “Financial Definitions and Non-GAAP Reconciliation” on page 14. 2 International includes Cromwell, Fabory, Mexico, China and Puerto Rico. In 2019, the company recorded a $120 million write-down of substantially all of the remaining intangible

assets of the Cromwell business. 3 ROIC shown is for MonotaRO, which serves as a proxy for the overall endless assortment businesses.

4 Total company also includes Specialty Brands, eliminations and unallocated expenses.

W.W. GRAINGER, INC. AND SUBSIDIARIES 7

U.S. Business – High-Touch Solutions ModelWith 2019 sales of $8.8 billion, the U.S. segment represents 72 percent of Grainger’s total revenue. The U.S. segment includes Grainger’s sales to large and midsize customers in the U.S., which make up about $8.1 billion in revenue, as well as specialty brands and intercompany sales primarily to Zoro in the U.S.

Further, Grainger defines its U.S. customers by two elements:

1) whether or not a customer has a contract and 2) the size of the customer site

In 2019, Grainger shifted its focus to driving 300 –400 basis points of outgrowth versus market by focusing on activities within its three strategic pillars: building advantaged MRO solutions, delivering unparalleled customer service and offering differentiated sales and services.

U.S. MEDIUMU.S. Medium, or midsize, customers tend to be less complex than large customers and want a purchasing experience that gives them peace of mind that their immediate business problems will be solved. Grainger sees significant opportunity for growth with midsize customers. The company developed new price, coverage and service offerings to more effectively compete for midsize customers who are not part of a negotiated contract. The U.S. Medium market is estimated at $56 billion of which Grainger has roughly 3 percent share.

CONTRACT

> $60K

$10– $60K

< $10K

2019REVENUE

(MRO potential in $/year)

~$4.8B

NONCONTRACT

~$1.1B

~$0.8B ~$0.7B

~$0.2B ~$0.4B

(As of December 31, 2019)

U.S. LARGE ~$7.0 billion in revenue

U.S. MEDIUM ~$1.1 billion in revenue

Numbers may not sum due to rounding.

U.S. LARGEU.S. Large customers tend to be more complex and require services at their place of business. Large customers value Grainger’s partnership approach, which focuses on reducing total cost of ownership in MRO spend by helping them manage their labor, product and inventory costs. The U.S. Large market is estimated at $76 billion of which Grainger has roughly 8 percent share.

2–2.5% ~1% ~0% (1)–0% 0.5–1%

U.S. MEDIUM Daily sales growth on $1.1 billion of revenue

Q1 Q2 Q3 Q4* FY

� 2018 � 2019

9%5%

5%

5%6%

16%14%18%20%

15%

Total U.S. MRO Market 2019

* Q4’18 sales are normalized for a negative 1 ppt. impact from Christmas/New Year’s timing. Revenue is for the full-year ended 12/31/2019.

2013 2014 2015 2016 2017

2–2.5% ~1% ~0% (1)–0% 0.5–1%

U.S. LARGE Daily sales growth on $7.0 billion of revenue

Q1 Q2 Q3 Q4* FY

5%

2%2%

3%3%

7%6%8%9%

6%

� 2018 � 2019

Total U.S. MRO Market 2019

* Q4’18 sales are normalized for a negative 1 ppt. impact from Christmas/New Year’s timing. Revenue is for the full-year ended 12/31/2019.

W.W. GRAINGER, INC. AND SUBSIDIARIES 8

Advantaged MRO SolutionsProviding advantaged MRO solutions means getting customers exactly what they need to solve a problem quickly. Grainger is continuously improving its ability to effectively and efficiently solve customers’ problems by strengthening its supplier relationships, curating its customer and product information, increasing the effectiveness of its marketing efforts and building upon its digital capabilities.

Merchandising and Supplier ManagementGrainger’s scale, knowledge of the marketplace and breadth of customers helps the company cultivate strong partnerships with suppliers. Productive supplier relationships allow Grainger to better describe the products it sells and build a more relevant assortment, so customers can be confident they have the right solution for their needs.

In 2019, the company reviewed $1.2 billion of its product assortment revenue, resulting in an incremental increase to revenue and a better experience for customers, and it expects to complete another $1.6 billion in 2020. Over the next few years, Grainger expects to add to its assortment in a selective manner based on current and future customer needs.

U.S. Business – Advantaged MRO Solutions

1 Internet Retailer ranking is based on 2019 revenue.

U.S. Business – Unparalleled Customer Service Grainger’s industry-leading Product Research and Order to Cash capabilities provide an exceptional end-to-end experience for customers of all sizes. Over the past two years, we’ve substantially improved systems, processes and controls to provide a flawless fulfillment experience from order placement to delivery and through invoicing and payment receipt.

Grainger offers both Digital (Grainger.com, EDI/ePRO, KeepStock) and Person to Person (phone, e-mail at store) product research, order origination and post-order support services, which gives customers the ability to order in a way that best meets their preferences and to receive personalized support for any post-order needs.

In addition to Grainger’s industry-leading online capabilities, Grainger offers 24x7 access to highly trained customer service representatives who are available to assist customers with product selection and order placement and to technical specialists who are able to assist customers with both product selection and post-purchase technical needs. Grainger has made significant investments in internal order management and customer communication capabilities that ensure customers continue to receive consistent and transparent service.

Grainger has invested heavily in its distribution center network to ensure optimum inventory levels and to provide fast, complete delivery on most orders. We’ve increased automation and standardization in

MarketingGrainger’s marketing efforts are central to acquiring new customers and growing with existing customers by helping them better understand the products, services and solutions Grainger offers. By leveraging analytics-focused evaluations around investments in search and display, radio, catalog and direct marketing, Grainger expects to reach and engage more customers through incremental marketing investments and more effective marketing outreach. In 2019, Grainger’s marketing efforts generated solid incremental revenue with its refined and improved approach, which Grainger plans to continue in 2020.

Digital CapabilitiesAs the world becomes more connected geographically and technologically, customers want highly tailored solutions with real-time access to information and fast delivery of products, and they want to be able to execute their business activities in the most efficient way possible, which often means online. In 2019, 64 percent of Grainger’s revenue came from online channels, making it the 11th largest e-retailer in North America, according to Internet Retailer.1 Through Grainger.com, eProcurement connections, KeepStock solutions and mobile applications, the company continues to develop online capabilities that promote a personalized, relevant and effortless experience for each customer.

response to the need for on-demand delivery of products, information and services. This capability, in combination with our strong store footprint, gives Grainger the market- leading ability to deliver quickly to customers in their time of need.

In 2020, Grainger will open a new distribution center in Louisville, Ky. to enhance its already robust and evolving distribution center network. The 1.5-million-square-foot facility will provide significant service benefits, including:

• The ability to stock more than 800,000 products in the network

• The ability to deliver critical orders by next-day air to most customers in the U.S. with late-order cutoff times

• Will-call service

• Export capability to support customers around the world

In addition, Grainger’s simple, customer-focused invoicing and return policies offer hassle-free ways to pay for goods and return products as customers need.

W.W. GRAINGER, INC. AND SUBSIDIARIES 9

Grainger’s competitive advantage with complex customers depends upon its ability to build deep customer relationships that deliver value. Grainger helps both large and midsize customers solve problems every day through its inside and outside sales force, inventory management solutions, technical support and services and ability to connect Grainger.com directly to customers’ procurement systems. Customers rely on Grainger to help them improve productivity, drive compliance, reduce complexity and save money.

U.S. Business – Differentiated Sales and Services

Building Relationships

TECHNICAL SOLUTIONS AND SUPPORT Customers rely on Grainger’s specialized technical resources to answer questions, provide expertise and help them find solutions.

• Trained and certified field-based specialists provide expertise and solutions in safety, energy management and metalworking

• Trained network of internal specialists help customers across the entire product portfolio

• Customer surveys highlight that businesses place significant value on the technical expertise they receive from Grainger

• A value-documentation tool helps quantify the value provided to customers through activities such as inventory management, energy management and safety solutions

SALES FORCE Customers appreciate Grainger’s sellers’ ability to understand their biggest challenges and help them solve problems.

KEEPSTOCK Grainger’s inventory management solution, KeepStock, helps customers reduce their MRO spend by analyzing consumption data, automating the procurement process and ensuring a customer’s required materials are on hand.

• KeepStock inventory management solutions include onsite branches, vendor-managed inventory (VMI), customer-managed inventory (CMI), secure vending, managed MRO and consignment

• Sales through KeepStock were ~10 percent of U.S. segment revenue in 2019

EDI/ePRO Customers with sophisticated purchasing platforms use eProcurement to communicate directly with Grainger.com.

• The direct connection provides a simple and efficient ordering experience for customers

• Sales through eProcurement were ~19 percent of U.S. revenue in 2019

OUTSIDE SALES FORCE

• > 2,700 professionals

• Focus on large customers with more complex purchasing requirements

• Understand customer-specific segments and geographies

• Form in-person relationships

INSIDE SALES FORCE

• > 400 professionals

• Focus on making more frequent contact with a larger number of medium customers at lower cost per contact

• Form relationships over the phone

W.W. GRAINGER, INC. AND SUBSIDIARIES 10

Grainger recently completed a two-year reset of the company’s Canadian business model. This transformation delivered foundational improvements to the Canadian customer experience and enabled Grainger’s operations in Canada to take better advantage of the size and scale of the company’s U.S. business.

With this transformation now complete, the Canadian business began operating as Grainger Canada in March 2020.

Backed by strong customer service, Grainger Canada plans to focus on delivering profitable growth in 2020 and beyond.

Grainger Canada had revenue of $529 million (USD) in 2019.

International – High-Touch Solutions ModelGrainger’s high-touch solutions operations outside of North America include Cromwell in the U.K. and Fabory in the Netherlands. Revenue for Grainger’s international businesses totaled $815 million (USD) in 2019.

Mexico – High-Touch Solutions ModelGrainger’s Mexico business consists of a network of 19 branches, two distribution centers and nearly 900 team members.

After five years of double-digit growth, Grainger Mexico grew in the mid-single digits in 2019. The company used a period of economic slowing to reset its go-to-market strategy, significantly reducing cost and developing a new model for calling on large and midsize customers.

Grainger Mexico currently holds approximately 1 percent share in an $11 billion (USD) MRO Mexican market, which translates into an opportunity for share growth with local customers and U.S. accounts that have locations across North America.

Canada – High-Touch Solutions Model

W.W. GRAINGER, INC. AND SUBSIDIARIES 11

Grainger’s endless assortment model makes business supply purchasing easy through a streamlined and transparent online relationship that provides access to everything a customer needs. The primary businesses in the endless assortment portfolio include MonotaRO in Japan and Zoro in the U.S.

In 2019, endless assortment model revenue grew revenue by 19 percent, driven by strong performance at both MonotaRO in Japan and Zoro in the U.S.

Operating earnings for the endless assortment businesses declined in 2019 due to growth investments at Zoro. The investments supported adding approximately 1.5 million products to the Zoro assortment, implementing a new analytics platform to increase repeat purchases and launching a new Zoro brand campaign to increase brand awareness.

Over the next 3–5 years, Zoro plans to continue executing on its growth initiatives, which include:

• Accelerating the positioning of Zoro as an endless assortment business focused on smaller businesses and individual buyers who want a simple transaction.

• Aggressively expanding Zoro’s assortment beyond the $136 billion industrial MRO market, with a goal to offer approximately 10 million products.

• Leveraging third parties to help Zoro fulfill an endless assortment model—meaning it will slowly become less reliant on Grainger as its sole fulfillment path.

• Investing in systems and people, so Zoro can develop better marketing and customer segmentation tools to support it in acquiring small businesses more effectively.

Endless Assortment Model

The endless assortment model differs from the high-touch solutions model in several ways. These differences allow businesses like Zoro U.S. to reach different customers than Grainger.

• The endless assortment businesses have extraordinarily broad SKU counts that often reach beyond MRO.

• They have very limited or no onsite services or salespeople, preferring instead to steer everything to online channels.

• They provide a consumer-like, simple and easy transactional experience that stands apart from other MRO websites that serve larger customers with more complex needs.

• They price to be competitive in the online market, with little-to-modest premiums.

• They are engineered to maximize customer acquisition.

$640 million

14%

2019 REVENUE

PRODUCT OFFERINGSKUS

REVENUE GROWTHVERSUS 2018

$1.2 billion

22%

~3.5 million(available)

~20 million (available)

SALESDollars in billions $10.0 $10.1 $10.4 $11.2 $11.5

2015 2016 2017 2018 2019

EARNINGS PER SHARE – DILUTED1

Dollars $11.58 $9.87 $10.02 $16.70* $17.29*

OPERATING MARGIN1

Percent

13.0% 11.0% 10.1% 12.0%* 12.1%*

11.0%

$13.73$15.32

ROIC1

Percent

28.5% 22.8% 22.2% 28.5%* 29.3%*

* Lower number represents reported �gure; upper number represents adjusted �gure. Reconciliations of the adjusted measures re�ected on this page to the most directly comparable GAAP measures are provided on page 14 of this Fact Book.

1 For a reconciliation of non-GAAP measures re�ected on this page and ROIC de�nition see “Financial De�nitions and Non-GAAP Reconciliation” on page 14.

CASH FLOW FROM OPERATIONSDollars in billions

$1.0 $1.0 $1.1 $1.1 $1.0

26.6%

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

24.6%

10.3%

62.0 58.8 56.3 55.9 53.7

SHARES OUTSTANDING (at year-end) Millions of shares

2015 2016 2017 2018 2019

DIVIDENDS PAIDDollars per share

$4.59 $4.83 $5.06 $5.36 $5.68

2015 2016 2017 2018 2019

W.W. GRAINGER, INC. AND SUBSIDIARIES 12

Creating Shareholder Value

The market in 2019 was certainly challenging, with market growth declining as the year progressed. Nevertheless, the Grainger team delivered solid results for the year. Even in a slowing market, Grainger’s emphasis centered on driving top-line growth while improving efficiencies in its cost structure. In 2019, the company drove 2 percent sales growth and expanded operating margins by 10 basis points over the prior year, driven by SG&A leverage and effective cost management.

The company’s cash flow for 2019 continued to be strong with over a billion dollars in cash generation, a majority of which was returned to shareholders in the form of dividends and share repurchases. The U.S. segment outgrew the MRO market by 150 to 200 basis points in 2019, and that outperformance to the market gained momentum throughout the year. The segment exited the fourth quarter growing about 300 basis points faster than the market.

Lastly, the endless assortment businesses grew revenue 19 percent in 2019, driven by strong growth at both MonotaRO and Zoro. Overall, 2019 was a strong year for execution of strategic initiatives and sets the company up for significant success going forward.

W.W. GRAINGER, INC. AND SUBSIDIARIES 13

2019 2018 2017 2016 2015

Financial Summary ($M)

Net sales $11,486 $11,221 $10,425 $10,137 $9,973

Earnings before income taxes 1,209 1,081 936 1,019 1,251

Income taxes 314 258 313 386 466

Net earnings attributable to W.W. Grainger, Inc. 849 782 586 606 769

Working capital 2,092 1,898 1,669 1,722 1,794

Additions to property, buildings and equipment and capitalized software

221 239 237 284 374

Depreciation and amortization 210 234 241 223 207

Current assets 3,555 3,557 3,206 3,020 3,049

Total assets 6,005 5,873 5,804 5,694 5,858

Shareholders’ equity 2,060 2,093 1,828 1,906 2,353

Cash dividends paid 328 316 304 303 306

Long-term debt (less current maturities) 1,914 2,090 2,248 1,841 1,388

Per Share ($)

Earnings – basic 15.39 13.82 10.07 9.94 11.69

Earnings – diluted 15.32 13.73 10.02 9.87 11.58

Cash dividends paid 5.68 5.36 5.06 4.83 4.59

Book value 38.37 37.47 32.45 32.41 43.50

Year-end stock price 338.52 282.36 236.25 232.25 202.59

Ratios

Percent of return on average shareholders’ equity 40.9 39.9 31.4 28.5 27.3

Percent of return on average total capitalization 18.8 18.1 14.0 14.6 19.0

Earnings before income taxes as a percent of net sales

10.5 9.6 9.0 10.1 12.5

Earnings as a percent of net sales 7.4 7.0 5.6 6.0 7.7

Cash dividends paid as a percent of net earnings 38.6 40.4 52.0 50.0 39.9

Total debt as a percent of total capitalization 54.3 51.5 56.2 54.1 45.8

Current assets as a percent of total assets 59.2 60.6 55.2 53.0 52.0

Current assets to current liabilities 2.1 2.4 2.1 1.9 1.7

Average inventory turnover – FIFO 3.3 3.3 3.3 3.1 3.1

Average inventory turnover – LIFO 4.4 4.6 4.5 4.3 4.1

Other Data

Average number of shares outstanding – basic 54,666,045 56,142,604 57,674,977 60,430,892 65,156,864

Average number of shares outstanding – diluted 54,934,069 56,534,185 57,983,167 60,839,930 65,765,121

Number of employees 25,300 24,600 24,700 25,600 25,800

Number of outside sales representatives 4,549 4,620 4,452 4,785 4,778

Number of branches 438 457 500 598 668

Number of products in the Grainger® catalog issued February 1 356,625 367,000 365,000 383,000 452,000

Note: See the company’s current and prior years’ Annual Report on Form 10-K for changes in accounting and other adjustments.

Historical Financial Summary (As reported)

W.W. GRAINGER, INC. AND SUBSIDIARIES 14

Twelve Months EndedDecember 31,

2019 2018

Operating earnings reported $1,262 $1,158

Restructuring, net branch gains (United States)

4 8

Restructuring (Canada) — 35

Restructuring (Other businesses) 2 6

Impairment charges (Other businesses) 120 139

Restructuring (Unallocated expense) — (2)

Subtotal 126 186

Operating earnings adjusted $1,388 $1,344

2019 2018

Net earnings reported $849 $782

Restructuring, net of branch gains (United States)

3 6

Restructuring (Canada) — 26

Restructuring (Other Businesses) 2 6

Impairment charges (Other businesses) 104 133

Restructuring (Unallocated expense) — (1)

Subtotal 109 170

Net earnings adjusted $958 $952

1 The tax impact of adjustments and impairments are calculated based on the income tax rate in each applicable jurisdiction, subject to deductibility limitations and the company’s ability to realize the associated tax benefits.

Note: The reconciliations above provide the information necessary to reconcile reported SG&A to adjusted SG&A, therefore no separate reconciliation is provided.

The company supplements GAAP financial information with certain non-GAAP measures, including adjusted operating earnings, adjusted operating margin, adjusted net earnings, adjusted diluted earnings per share and adjusted ROIC. Adjusted measures exclude items noted below that may not be indicative of core operating results and provide a better baseline for analyzing trends in the underlying business.

Note on ROICAdjusted ROIC means the Company’s return on invested capital calculated using operating earnings, adjusted (as reconciled to its most directly comparable GAAP measure in Part I I, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019). The GAAP financial statements are the source for all amounts used in the ROIC calculation. ROIC is calculated using operating earnings divided by net working assets (a five-point average for the year-to-date). Net working assets are working assets minus working liabilities defined as follows: working assets equal total assets less cash equivalents (five-point average of $150.2 million and $173.6 million), deferred taxes, and investments in unconsolidated entities (part of Other Assets), plus the LIFO reserve (part of Inventories – net; five-point average of $414.1 million and $386.7 million). Working liabilities are the sum of trade payables, accrued compensation and benefits, accrued contributions to employees’ profit-sharing plans, and accrued expenses.

Financial Definitions and Non-GAAP Reconciliation

Company HeadquartersW.W. Grainger, Inc.100 Grainger Parkway Lake Forest, IL 60045-5201847.535.1000www.grainger.com

Corporate Social Responsibilitywww.graingercsr.com

Investor Relations ContactIrene M. Holman Vice President, Investor Relations 847.535.0809

Media Relations ContactJoseph Micucci Senior Director, External Affairs847.535.0879

TrademarksThe trademarks contained in this document are the property of their respective owners and the use of such trademarks shall inure to the benefit of the trademark owner.

Twelve Months EndedDecember 31,

2019 2018

Diluted earnings per share reported $15.32 $13.73

Restructuring, net of branch gains (United States)

0.08 0.15

Restructuring (Canada) — 0.6

Restructuring (Other businesses) 0.04 0.11

Impairment charges (Other businesses) 2.15 2.43

Restructuring (Unallocated expense) (0.01) (0.03)

Total pretax adjustments 2.26 3.26

Tax effect1 (0.29) (0.29)

Total, net of tax 1.97 2.97

Diluted earnings per share adjusted $17.29 $16.70